Phillips 66 bouncing back with Q2 profits
After a difficult start to the year, Phillips 66’s profits bounced back in second quarter, boosted by higher margins in crude oil refining and more volume flowing through its pipelines and natural gas liquids terminals.
The Houston refiner said Friday that its second-quarter profit grew nearly 7 percent to $1.4 billion from $1.3 billion in the second quarter of 2018. Revenues slipped 4 percent to $28.5 billion from $29.7 billion a year earlier.
The companies midstream earnings — which include pipelines and natural gas liquids segment — soared 77 percent year to $423 million from $238 million the same time year.
Higher volumes through its pipelines, combined with better margins and more natural gas liquids through its trading hub in Sweeny, bolstered results, the company said.
But results in refining and chemical segments were mixed. Refining margins improved compared to the first quarter, but earnings in the segment fell 17 percent to $983 million in the second quarter from $1.2 billion a year earlier.
Earnings in its chemical busi
ness also fell, declining to $275 million from $324 million from the second quarter of 2018.
In the second quarter, Phillips 66’s joint venture with Chevron, Chevron Phillips Chemical, said it is growing its footprint in two deals with Qatar Petroleum to build petrochemical plants in Qatar and on the Gulf Coast. The Gulf Coast project will include a 2 million metric ton ethylene cracker — which converts natural gas feedstocks into the building blocks of plastics — as well as two high-density polyethylene units, each with capacity of 1 million metric tons per year. Final investment decision is expected no later than 2021, with targeted startup in 2024, Phillips 66 said.
Meanwhile, Phillips 66 is continuing to deepen other investments in Texas, too. In Sweeny, Phillips 66 is upgrading its fluid catalytic cracking unit to increase production of higher-value petrochemical products and higher-octane gasoline. The project is anticipated to be completed in the second quarter of 2020.
Also in Sweeny, Phillips 66 is rapidly expanding its natural gas liquids capacity to meet growing demand. The company is moving forward with plans to build a fourth fractionator with a capacity of 150,000 barrels a day. Fractionators separate natural gas liquids into products such as butane, ethane and propane, which can be used to make petrochemicals
Once the project is complete, the Sweeny Hub will have 550,000 barrels a day of fractionation capacity.
In its pipeline segment, Phillips 66 said its 900,000 barrel a day Gray Oak Pipeline will be completed by the end of the year to carry crude oil from the Permian Basin in West Texas and Eagle Ford shale in South Texas to Gulf Coast destinations including Corpus Christi and the Sweeny area, where Phillips 66 has a refinery.
Also in the second quarter, the company signed agreements to construct the Red Oak Pipeline system to provide crude oil transportation from the storage hub in Cushing, Okla., and the Permian to multiple destinations along the Gulf Coast, including Corpus Christi, Houston and Beaumont. Its new Liberty Pipeline will move crude oil from the Rockies and Bakken production areas to Cushing.